• Core inflation rises two tenths, to 0.8%, due to the acceleration of non-energy industrial goods and services
  • Spain continues to gain competitiveness due to the inflation differential with the eurozone

The Consumer Price Index (CPI) increased 0.1% in the interannual rate in July, according to figures published today by the National Statistics Institute (INE). This rate is one tenth higher than that advanced by the INE at the end of last month and coincides with that registered in June. The stabilization of inflation is explained by the upward trend in the prices of non-energy industrial goods (BINE) and services, offset by the moderation in unprocessed food and energy products.

The prices of energy products registered a year-on-year rate of -5.8% in July, 0.1 points lower than the previous month. This evolution is due to two opposite effects: On the one hand, the upward evolution of the prices of electrical energy and, on the other, the greater decrease in fuel and fuel. Electric power registered a monthly increase of 2.9%, compared to the 1.9% decrease a year earlier, which led to an increase of the interannual rate of 5.1 points, to 8.6%. The annual rate of fuels and fuels fell 1.6 points, to stand at -10.7%, due to the fall in the prices of both fuels and gas.

The year-on-year rate of change in unprocessed food prices has also decreased significantly, by 1.5 percentage points in July, to 1.7%, mainly due to fresh fruits and fresh vegetables.

Core inflation (which excludes the most volatile CPI elements, such as fresh food and energy) rose two tenths in July, to 0.8%. This rise is explained by the rise in BINE, which increased its annual rate by one tenth, to 0.4%, and in service prices, with annual growth of 0.9%, two tenths above the previous month. . The acceleration of services rests on the heading of tourism and hospitality, whose annual rate rose two tenths, to 1.4%.

The annual rate of processed food, beverages and tobacco remains at 1.2% in the previous month, as the four-point rise in the annual rate of oils has been offset by the slowdown in tobacco and other items such as coffee , cocoa and teas.

In month-on-month terms, the CPI fell by 0.9% in July, the same as in the same month of 2014. This decrease is explained by the lower cost of unprocessed foods, especially fresh fruits (-2.4%), the fresh legumes and vegetables (-5.6%) and potatoes and their preparations (-1.5%). Energy products also contributed, with a decrease of 0.6%, due to the fall in fuel and fuel prices (-1.9%), and BINE (-3.9%), especially clothing and footwear (-12.9%) due to summer sales.

The annual inflation rate increased in July in seven autonomous communities. In five it was higher than the national one: the Balearic Islands (0.6%), Catalonia (0.4%), the Valencian Community (0.3%), the Basque Country and La Rioja (0.2%). Andalusia's inflation coincided with national inflation. In the rest of the Autonomous Communities, inflation fell below the national rate, with the greatest falls in Extremadura, Castilla-La Mancha, the Canary Islands and Aragon (-0.3%). On the other hand, the annual rate of the CPI at constant taxes stood at 0.1% in July, the same as that of the general CPI.

The INE has also published the harmonized CPI (IPCA) corresponding to the month of July, whose annual rate stands at 0.0%, the same as the previous month. If this rate is compared with that estimated by Eurostat for the euro area as a whole in July (0.2%, the same as in June), the inflation differential favorable to Spain remains at -0.2 percentage points.

In summary, the annual variation rate of the CPI has remained at 0.1% in July, after five months of consecutive increases. The stability of inflation has been due to the fact that the acceleration of the components with a more regular evolution of the CPI (BINE and services) has fully offset the moderation of the most volatile, unprocessed food and energy products. The underlying rate has risen two tenths, to 0.8%, reflecting the dynamism of private consumption. Inflation in Spain continues to be lower than that of the Eurozone, allowing gains in the competitiveness of the economy, with the consequent favorable effect on exports, production and employment.

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